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A Truly Global Crisis: "Bankz are Idiotz"

Lehman, Merrill, Crisis, SIBOS

You know the credit crisis is really big when a Bulgarian truck driver says in a Viennese bar in broken English "bankz are idiotz!"It happened to me last night as a colleague and I stopped at a local watering hole near our hotel in Vienna for just "eine bier, oder zwei, oder drei (just one beer, or two, or three)." Once our bearded drinking buddy learned that we were in town for a banking event. (SIBOS, the global payments conference), he immediately began asking about banks, curious to know what was going on. Yes, it is truly a global crisis.

The discussion at SIBOS always came back to the crisis. Although there are many unknowns, the consensus was that IT spending would be drastically cut back. Readers are reporting the same. Vendors at Gartner's CEP conference were lamenting the small number of buyers at the event, said one reader. Also, many pending contracts from hedge funds (one portion of the market that vendors are targeting as traditional Wall Street firms struggle), have been canceled or postponed indefinitely. The IT spending outlook isn't good.

As I write this on my flight home, I can't help but think that I'm returning to to a very different New York City than I left just six days ago. The changes have been massive and will continue. First Lehman's (I think we can all refer to these firms on a first name basis after this week) bankruptcy, then Merrill and Bank of America joining up, then the AIG shocker, and now news that Morgan Stanley is looking to be bought or combined with a bank, possibly Wachovia. And WaMu has worked out some deal with its creditors that allows it to search for a buyer.

If all of this comes to fruition, that leaves Goldman Sachs as the standalone broker dealer on Wall Street. Wow! If someone wrote this week's events in a fiction novel, no publisher ever would have printed it -- the premise would have been too far fetched: Lehman goes bankrupt on the same day Merrill joins with BofA, followed the next day by the Fed bailing out the world's largest insurer AIG, just one week after the Fed bailed out Fannie and Freddie? What a twisted, out of touch plot. Something like that would never happen.

Well, never say never. Greg MacSweeney Wall Street & Technology 212-600-3081 gmacsweeney@techweb.comLehman, Merrill, Crisis, SIBOS Greg MacSweeney is editorial director of InformationWeek Financial Services, whose brands include Wall Street & Technology, Bank Systems & Technology, Advanced Trading, and Insurance & Technology. View Full Bio

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